DGFT Draft SOP for Reporting IRMs Through NBFC Factors
The Directorate General of Foreign Trade (DGFT) has issued a Draft Trade Notice in August 2026 seeking stakeholder inputs on a proposed Standard Operating Procedure (SOP) for reporting Inward Remittance Messages (IRMs) relating to NBFC Factors.
The draft SOP aims to further streamline the reporting of inward remittances received through authorised NBFC Factors into exporters’ accounts. It builds on earlier DGFT initiatives for the online self-certification and reconciliation of Electronic Bank Realisation Certificates (eBRCs).
What Is the Draft Trade Notice About?
The proposed SOP establishes a process for NBFC Factors and AD-I Banks when handling export factoring proceeds and related IRMs.
The objective is to improve identification of factoring-related transactions and reduce the possibility of incorrect or duplicate IRM creation.
Background of the eBRC System
DGFT had previously introduced and enhanced an online self-certification mechanism for eBRCs through Trade Notice No. 33/2023-24 and Trade Notice No. 12/2024-25.
These measures were intended to simplify eBRC reconciliation and support greater digitalisation of export documentation.
Proposed SOP for NBFC Factors and AD-I Banks
1. SWIFT Message for Foreign Currency Proceeds
Where an NBFC Factor remits factoring proceeds in foreign currency to an AD-I Bank, the Factor will use the following text in its SWIFT messages:
“AD-AD(P0092) EXP FACTORING PROCEED”
The purpose is to help AD-I Banks identify these funds correctly and avoid creating IRMs against foreign currency funds received from Factors.
2. INR Proceeds From Discounted Export Bills
A different process applies where Factors discount export bills and release the proceeds in INR to AD-I Banks.
In such cases, AD-I Banks will not receive a SWIFT message. If an exporter approaches the bank for creation of an IRM against these INR funds, the bank should advise the exporter to approach the Factor instead.
3. Identification of Factoring Transactions
AD-III entities, including factoring agencies, are expected to follow the prescribed process while remitting funds to AD-I Banks and ensure that factoring-related transactions are correctly identified.
How the Proposed System Supports eBRC Reconciliation
The enhanced system is intended to integrate remittance data associated with NBFC Factors.
Under the proposed process, exporters will be able to view relevant IRMs on the DGFT portal and self-certify their eBRCs by matching remittance information with the corresponding invoice or Shipping Bill records.
This is expected to support greater transparency and accuracy in export documentation and reconciliation.
Role of AD Category II Entities
The draft also refers to the Foreign Exchange Management (Authorised Persons) Regulations, 2026, notified by the RBI on April 30, 2026.
According to the draft, the regulations expanded permitted activities of AD Category II entities to include foreign trade transactions up to ₹25 lakh per transaction. These entities may include non-bank entities and, after obtaining the required licences, may also undertake reconciliation-related activities in the DGFT system.
Note:
This is a Draft Trade Notice, issued for stakeholder inputs. Exporters, NBFC Factors, banks and other affected stakeholders should refer to the final DGFT instructions before treating the proposed SOP as an operative compliance requirement. The draft invites feedback through ebrc-dgft@gov.in.
What Exporters Should Watch
Exporters using factoring arrangements should pay attention to:
- Correct identification of factoring proceeds.
- The prescribed SWIFT message for foreign currency factoring proceeds.
- The separate process for INR proceeds.
- Matching IRMs with relevant invoices or Shipping Bills.
- Accurate eBRC self-certification on the DGFT portal.
- Coordination between exporters, NBFC Factors and AD-I Banks.
A clear reconciliation process can help reduce mismatches between export realisation data and supporting export documents.
Conclusion
The DGFT’s proposed SOP seeks to bring greater clarity to the reporting of inward remittances associated with NBFC factoring transactions. By improving identification of factoring proceeds and integrating relevant remittance information with the DGFT system, the proposed mechanism is designed to support smoother eBRC reconciliation.
Exporters and other stakeholders involved in export factoring should review the draft carefully and monitor DGFT communications for the final SOP and its effective implementation.
Notification Reference:
DGFT
Trade Notice No. 20/2026-27
12/08/2026